NAE Offshoring Project: Issues and Questions to be Addressed in the Commissioned Papers

What is the nature of engineering worka in the industry, and how is it changing? Why is it changing? What are the typical entry level skills and credentials required of engineers? How do various countries compare in the production of qualified engineers, and in the institutions that provide skills and credentials?

What is the current situation with regards to globalization of the industry? How globalized is the industry in terms of manufacturing, competition (e.g., do firms based in one or a few countries dominate certain market segments?), and capability (e.g., are certain engineering capabilities available in only one or a few countries)?

What do we know about the U.S. engineering workforce in this industry from statistics and other data? Is the engineering workforce growing, shrinking, stable, aging, or we don’t know? Are wages rising at the same pace as the overall engineering workforce? Are there differences between those with graduate, 4-year, and 2-year degrees?

In what countries and regions is engineering work expanding in this industry, and why? Is offshoring occurring? If so what are the primary sources and destinations? What roles have multinational corporations and start-ups played? Has government policy played a role? Has engineering work followed production? Are engineering workforces growing, and if so how fast? What are trends in wages? What are the current and projected capacities for educating and training engineers?

Is it fair to say that engineering work previously performed in the United States is being offshored, or is there a positive net effect? Are there qualitative differences in the types of engineering jobs that are performed in the U.S. and those performed elsewhere? Are there types of engineering work in which the United States or other countries enjoy distinct advantages?

Are there areas of engineering work that are more or less vulnerable to offshoring? What can individual engineers and U.S. institutions do to retain their competitiveness?

Can you make projections regarding future offshoring trends? How concerned should U.S. engineers be about offshoring in this industry? Will wages in countries in offshoring destination countries rise to an equilibrium level? Are new destination countries likely to emerge? What factors will determine future outcomes?

a“Engineering work” is defined as the full spectrum of research, product and process development, engineering management, manufacturing engineering, etc.

growth of the open-source movement and other advances in underlying technologies will also affect how offshoring and regional capabilities evolve.

As in other industries, the growth of offshoring in software development thus far has been led by U.S. companies. Japanese companies are much less inclined to offshore software work (Aspray et al., 2006). Western Europe-based firms fall somewhere in between; of these, U.K.-based companies account for the largest share of offshoring.

One technological trend that will challenge software

TABLE 3-3 Increases in Offshoring of Software Production in India

Employment

1995

2005

United States

1.5 m

2.6 m

India

27,500

513,000

Source: Dossani and Kenney, this volume.

developers in the future, with uncertain implications for offshoring, is the growing popularity of multicore processors and multiple-processor systems. These technologies offer significant advantages in hardware design and more rapid processing, without the heat limitations of single processors. However, multicore designs require software designers who can deal with concurrency and develop new programs in which tasks can be broken into multiple parts that can be processed separately and reassembled later (Krazit, 2005). Because these skills may not be available in the usual offshoring destination countries, relatively more engineering work may become available in the United States.

Some concerns have been raised about whether the globalization of software might be a serious threat to national security (Hamm and Kopecki, 2006). For example, accidental defects or maliciously placed code might compromise the security of U.S. Department of Defense networks. The Defense Science Board is currently completing a study on how the department should address these concerns.

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